Understanding what you have saved in a pension and whether you’re getting the best from it can be complicated if you have accumulated a number of different pension pots, according to St. James’s Place Wealth Management.
Everybody wants a good, comfortable retirement. But with over a quarter of the 55+ age group relying only on their State Pension for retirement, things don’t look good for everybody.
To make the most of your retirement, the best you can do is plan well and make sure none of your pension funds are wasted or ‘lost’ in the system.
[top_pitch]
Why keeping track of pensions is so difficult
Data from the Department for Work & Pensions shows that the average person will have 11 employers during their lifetime. Many will have 14 or more employers. This can result in a confusing mix of pension pots scattered across different companies, state entitlement and private pensions.
According to the Pension Tracing Service, Department for Work & Pensions (May 2016), there is an estimated £400 million languishing in dormant accounts.”
How to find some of those ‘missing’ pensions
The findings of St. James’s Place show that many retirement pots remain unclaimed because “people have lost the paperwork, forgotten the name of their provider or can’t remember if they even had a pension with a former employer.”
To help locate this money, the government recently launched a Pension Tracing Service website. The service can help you track and locate any lost pension savings in your name. It’s free to use and provides trace results immediately. All you have to do to track potential old pensions is enter information about your former employers into the database.
[middle_pitch]
How to find out if your pension is too low
Do you know how much money you’ll get when you retire? Are you on track for a good retirement, or do you need to work harder to increase your retirement savings? If you aren’t sure where you stand, there are calculators to help. The gov.uk website has a State Pension forecast calculator that’s a good place to start.
You can find additional calculators at The People’s Pension. With these, you’ll be able to figure out how long your retirement money needs to last. You can also get an estimate of how much you need to save for a good retirement.
Increasing your pension savings
If the numbers don’t add up, there are things you can do to grow your retirement funds. An easy way to start is to increase regular savings. Even a small extra amount every month to your retirement accounts can add up significantly over the years.
Look also at any bonds, ISAs or building society savings you might have. These could be added to your retirement savings, as can extra money when you receive a raise or an inheritance. If all else fails, you can defer your retirement for a few years. The longer you defer taking your pension, the more time it has to grow.
